Updating post from Reddit.
Hi all,
Assuming the subject property is well located near amenities, means of transportation, and with good commutability to London via train.
Are HMO’s still worth it after the higher operational costs and management intensive nature of it?
Thanks.
Too vague a question to answer
Have you got any HMO’s?
You need to know what your doing to run a HMO - A huge part is doing everything to the letter so eg wired fire alarms, smoke alams etc and getting a mix of people who will get along and not cause issues and pay their rent on time
If you're unsure there are Companies who specialise - one near me in Manchester is "The HMO Guys" and their operation seems pretty good
Please dont create a crap basic HMO - Its unfair on the neighbours (trust me i live next to one full of nutters who spend all night in the front garden shouting - well sat nts anyway)
Whereas mine never a squeak
Or you can use a letting agent who notifies you of all the stuff that needs doing (certificate's etc). That's what I do and it hasn't failed me, simplifies things
You’re right but OP sounds like he has no experience and I think getting the mix isn’t tenants right etc is harder than it looks for a newbie. You only need one psycho to ruin a whole setup
This is advice I give many after being in the industry for decades acting for both HMO owners, general LLs and being a LL myself. Money is made between the lines, figure out where you can add value which others aren’t, can’t or don’t.
For HMOs, if you know of a way that you can do something which adds value then great. Adding value might be finding the right property, knowing a trade, having experience at X etc.
If your plan is to throw money at the property in the hope of generating huge profits by renting to lots of people then this is a massive oversimplification of HMOs and you’re potentially prone to failure. Personally, I always leave HMOs to the experts as in my experience it’s non-stop arguments and despite dealing with contentious property matters for decades I myself am not the ‘hard man’ to be putting up with HMO disputes every other day.
I find my value in buying properties with legal defects; some of which I hold onto as a rental properties and some I just flip.
When I think of a HMO LL I think of someone who is incredibly attentive to detail, available 24/7, has a chip on their shoulder, high cash flow (not to be mistaken for profits), knows a good reliable trade and general stressed out.
Look on social media, there’s lots of HMO owners offering courses of the like. They’re offering courses because they’re not making enough money from the HMO side but have a huge cash flow to show off (again not to be mistaken for profits). None of these HMOs guys on the socials I would want to have a pint with though.
Absolutely not! The tenant quality is often very poor which means it can become impossible to manage and non profitable very quickly. They are hard to sell. The government renters reform bill will make it near impossible to evict tenants. Fire alarm regulations are getting stricter - so more checks and more costs. Get yourself a nice 2 bed freehold property instead to rent out… and you might even be able to build a dormer on it and add more capital value. Or buy a HMO.. whatever you choose I hope it works out for you.
I have two HMO's that I self manage. They are only minutes away from my house so I can respond to the house WhatsApp requests immediately. Is it worth it? Yes, but only because I'm so close and do the majority of fixes myself. Aside from making the properties compliment and paying for the HMO licences, there's quite a bit of work and it's getting harder and harder. Paying the tax bill is the biggest problem (next one is £27k for me). Ok, I still come out with a profit but the margins are becoming slimmer. If the EPC thing comes in and I have to cough up £15k per house to comply, that's when I'm cashing it all in.
£27k tax bill ouch. I think that answers the OPs question.
For me it was a royal PITA yes the income was very nice but students are horrible dirty creatures 🤭 I only did it for a few years.
Would never let to students. I know this is some people's business model but I don't understand why they do it.
People of all ages can be messy, inconsiderate ect.
Better students than junkies, mental health patients, alcoholics... We have 84 HMOs in my neighbourhood, and each time a new planning application comes in for a new one the local neighbourhood watch goes nuts. Pretty much every time someone gets broken into, the miscreant is in one of these places. If you're doing HMOs, let them be young professionals, folks who get along but need to share a house because no boss is paying enough to buy these days. Don't be a slum HMO landlord like we have round Erdington & Stockland Green.
That's exactly why I self-managed, it's me who chooses who lives there. They are all young professionals who want a safe, secure and comfortable place to live and rest. I work hard to get the balance of tenants right so everyone is happy. By creating good quality, happy houses, void periods are almost eradicated.
This is the way!
I have a HMO that's managed by a letting agent and it's much easier...
How much are the HMO licences?
£800 for the yeae
Social media seems awash with young property "millionaires" selling courses on how they were able to build up a 10+ property portfolio in just 5 years and how you can do it also. There's something fishy about the whole thing 🤔
They are all con artists. The only way you can do it is with a lump sum for the first mortgage and then tons of hard work. It's not easy money.
It all depends on the deal though, you can't really umbrella All HMOs with your personal experience l. I have a HMO property in Liverpool that's managed by a letting agent who takes 11% . They handle a lot of this stuff for me and it's still been an amazing investment
Depends on the area, I have some in inner and outer London, it’s a different world just a short distance apart.
Go on somewhere like spare room or right move check the adverts in your area, see what the quality, rents or tenants they are looking for and go from there.
£1100 each last time, if I remember.
Yes, but it depends on the location and then average rental income for that location, for example, in leeds
Rent for a large non hmo home is on average around £1.6-2k
Rent for a large hmo home (5/ 6 bedroom) is around £500 pppm, which equates to £2.5k/£3 per month. If you have letting agent, they will take 11% but will manage everything for you.
If you are located in a student area close to the uni, then Rent is almost guaranteed as long as your house is decent condition, you will get decent rent.